The Pattern That Never Failed Since 1950

Marc Chaikin has spent 60 years on Wall Street, and he says there is one market pattern that has never failed since 1950. He calls it the election cycle. The pattern works like this: midterm election years bring political uncertainty, which triggers market corrections. But buying during those corrections has produced gains 12 months later in 100 percent of cases going back to 1950. The average gain for the entire market has been nearly 40 percent.

In the MAGI presentation at Brownstone Research, Chaikin’s election cycle pattern converges with Jeff Brown’s technology thesis about Manifested AGI. Together, they argue this convergence creates what Brown calls “a rare retirement window that could change the financial future of millions of Americans.”

As we explain in our full review of the MAGI presentation, the election cycle is the market-timing component of the thesis. Brown handles the technology analysis. Chaikin handles the quantitative timing. Here we focus on the pattern itself and why the convergence with a technology revolution matters.

How the Election Cycle Works

Chaikin explains the mechanics in the presentation: “The markets hate uncertainty. And during midterm election years, like this year, there’s a lot of uncertainties. Nobody knows how the balance of power will change in Washington. Nobody knows who will control Congress. And all the uncertainty tends to trigger corrections in the stock market.”

The pattern is based on over a century of data. The midterm election year is the weakest of the four years in the election cycle, producing market corrections. But historically, those corrections have been buying opportunities. Chaikin says: “Going back to 1950, if you bought stocks in that mid-term election year correction, 12 months later you would have made money in 100 percent of the cases.”

The average gain has been nearly 40 percent for the entire market. For individual stocks, the gains can be much larger. Chaikin says: “If you can pick the right stocks, the gains could be much, much bigger.”

Chaikin is emphatic about the data: “All you see is green. This is like a little-known law of investment that’s written in stone.” He adds: “This is not a prediction. This is a market cycle that IS happening this year, guaranteed.” The “guaranteed” language is strong, and the 100 percent track record should be understood as a historical pattern. Past performance does not guarantee future results. But the pattern has held across Republican and Democratic administrations, wars, booms, and busts, for over 70 years.

The 1998 Parallel: When the Pattern Met a Technology Revolution

The most powerful part of the election cycle thesis is what happens when the pattern aligns with a technology revolution. The last time this happened was 1998, a midterm election year during the dot-com acceleration.

Brown explains: “In 1998, adoption was accelerating rapidly. AOL was flooding mailboxes with its iconic free trial CDs. That was the year when Google went public. AOL acquired Netscape. And the dot-com boom was in full swing. ‘Going online’ wasn’t just for geeks anymore. By the end of that year, everyone was doing it.”

The market had a correction during 1998 because it was a midterm election year. Many people thought that was the end of the dot-com boom. But according to the election cycle, that correction was setting the stage for “the most violent phase of the boom, the melt up.”

What followed was extraordinary. During the 12-18 months after the 1998 correction:

  • Magic Software Enterprises turned $10,000 into $185,000 in 12 months
  • InterDigital turned $10,000 into about $240,000 in 15 months
  • Qualcomm turned $10,000 into $366,000 in 14 months
  • Harmonic turned $10,000 into $360,000 in 18 months
  • Steel Connect turned $10,000 into about $280,000 in 12 months
  • Viavi Solutions turned $10,000 into almost $300,000 in 18 months

Brown notes: “In some of these cases, we’re talking about making the equivalent of many decades of gains in just a matter of months.” For more on these historical parallels, see our articles on predictions for the future and real-time analytics.

The Current Convergence

Brown and Chaikin argue the current moment is a repeat of 1998, but potentially bigger. The argument has three components:

The technology is more transformative. In 1998, the technology was web browsing. Today, it is Manifested AGI, artificial general intelligence that moves from software into physical robots. Brown defines MAGI as “a new category where artificial intelligence escapes the digital realm and manifests itself in the physical world through robotics and autonomous systems.” The scope is larger. For more, see our article on the Optimus robot.

The capital is larger. In 1998, the infrastructure build was significant but nothing like today. Brown says big tech invested $400 billion in AI infrastructure last year, $725 billion this year, and nearly $850 billion planned for next year. He calls this “the largest capital-expenditure wave in history,” bigger than the Apollo Moon program, the Manhattan Project, and the U.S. Interstate Highway System combined.

The election cycle is creating the same buying window. Chaikin says the midterm election year correction is happening now, creating the same kind of buying opportunity that existed in 1998. And his Power Gauge system is showing bullish signals on the stocks Brown recommends. For more on the system, see our articles on the Power Gauge and money flow.

The 2022 Validation

The most recent validation of the election cycle pattern came in 2022, the last midterm year. During that correction, Chaikin’s Power Gauge system flagged Meta, Builders First Source, and AMD. All three more than doubled within 12 months.

That is the system working in real time, not just in backtests. The 2022 cycle demonstrated that the election cycle pattern, combined with the Power Gauge’s stock selection, can identify specific stocks that go on to produce significant gains. In the MAGI presentation, the Power Gauge is showing bullish signals on AMD, the hidden Tesla supplier, and the Terafab equipment supplier.

AMD, the free ticker, is a direct beneficiary of the AI infrastructure build. Brown first recommended it in 2017, and it is up 4,100 percent since. He still recommends it, citing 76 percent expected earnings growth this year and deals with OpenAI, Meta, and Microsoft. For more, see our article on AMD stock.

Considerations

The election cycle pattern is one of the more compelling data points in the MAGI presentation because it is based on over 70 years of historical data. The 100 percent success rate going back to 1950 is remarkable. The 1998 parallel, where the pattern aligned with a technology revolution, is a genuinely useful historical analogy. And the 2022 validation, where the system flagged specific stocks that doubled, adds recent evidence.

What to consider: “100 percent of cases” and “guaranteed” are strong claims. The pattern has held for over 70 years, but past performance does not guarantee future results. Market patterns can break, especially in unprecedented conditions. The specific stock returns from 1998 (like $10,000 into $366,000 on Qualcomm) are best-performing examples, not average results. And the convergence of the election cycle with a specific technology thesis does not guarantee that the current moment will replicate the 1998-1999 melt-up.

What makes the thesis worth considering is the convergence of multiple independent data points: the historical election cycle pattern, the Power Gauge’s real-time bullish signals, the infrastructure spending trajectory, the institutional money flow from named billionaires, and the technology thesis grounded in a real patent and real production plans. When multiple independent indicators point in the same direction, the thesis deserves serious attention.

Ready to learn more? Click here to access Jeff Brown and Marc Chaikin’s full research.

This is not financial advice. Always do your own research before investing.